Fitch affirms ratings of four top Philippine banks

Gives them a stable rating.

Fitch Ratings affirmed the ratings of Banco de Oro Unibank Inc., Bank of the Philippine Islands, Development Bank of the Philippines and Land Bank of the Philippines. The former two are the Philippines’ largest banks.

Fitch said the banks’ ratings outlooks are stable, and that their long-term issuer default ratings and national long-term ratings were driven by their viability ratings. The credit strengths of the four banks are their stable deposit bases, satisfactory liquidity, high core capitalization and rising loan loss reserves.

It said these are counterbalanced by varying degrees of structural issues faced by the banks, including their concentrated loan books, foreclosed properties with modest reserves and developing corporate-governance standards, alongside the presence of conglomerates as controlling shareholders.

BPI’s ratings are supported by its established domestic franchise, sound and steady financial metrics and prudent management record through economic cycles. BDO’s ratings reflect its growing domestic presence and funding strength, high capitalization and reserves, improving but still-modest profitability, and reasonable asset quality.

The banks’ stable outlooks reflect Fitch’s expectation they will largely maintain steady risk profiles over the near- to medium-term, underpinned by a benign domestic economy, manageable corporate leverage and low interest rates.